Can a simple thumbs-up emoji (👍) create a legally binding contract?

A recent Saskatchewan Court of Appeal decision, Achter Land & Cattle Ltd. v. South West Terminal Ltd., suggests that it can. The ruling, which upheld a lower court’s decision, found that a text message containing the thumbs-up emoji constituted acceptance of a contractual offer. This decision has sparked discussions about the evolution of contract law in the digital age. Could similar reasoning apply in Ontario? In this article, we will explore contract formation principles in Ontario and whether digital communications, including emojis, can create binding agreements.

The Saskatchewan Court of Appeal Decision

Facts of the Case

Achter Land & Cattle Ltd. (ALC) is a farming corporation that had engaged in multiple grain contracts with South West Terminal Ltd. (SWT). On March 26, 2021, SWT’s representative sent a text message to ALC’s principal, Chris Achter, with a photograph of a contract’s front page and the words, “Please confirm flax contract.” Achter replied with a single thumbs-up emoji. Later, when the agreed-upon delivery date arrived, ALC did not deliver the flax, arguing that the contract was unenforceable because it lacked a formal signature.

SWT sued for breach of contract, claiming damages for the price difference between the agreed price and the market price at the time of non-delivery. The trial judge ruled in favor of SWT, holding that Achter’s emoji response constituted acceptance of the contract. The court awarded damages in the amount of $82,200.21 plus interest, reflecting the difference between the contract price of $669.26 per metric tonne and the market price at the time of non-delivery.

The Court’s Reasoning

On appeal, the Saskatchewan Court of Appeal upheld the decision, reasoning that:

1. Objective Intention to Contract – Courts assess whether a reasonable observer would conclude that a party intended to enter into a contract. Given the history of text-based transactions between ALC and SWT, the emoji was consistent with prior acceptance methods.
2. Electronic Signatures and Statutory Interpretation – The court considered the Electronic Information and Documents Act, 2000 (EIDA), which allows electronic actions to constitute acceptance. It found that the thumbs-up emoji met the requirement of an electronic signature under The Sale of Goods Act.
3. Course of Dealings – In previous transactions, ALC had acknowledged contract terms via brief text messages, sometimes as simple as “ok” or “yup.” The court found that the emoji functioned in a similar manner.

Thus, the Court ruled that a contract had been validly formed and enforced the damages against ALC.

Implications for Ontario Contract Law

The Saskatchewan case raises questions about contract formation in Ontario. Would a similar ruling apply here? The fundamental principles of contract law—offer, acceptance, and consideration—apply uniformly across Canada. Given Ontario’s legal framework, it is likely that a similar outcome could occur under Ontario law.

Ontario’s Electronic Commerce Act, 2000 recognizes electronic signatures and communications as valid, provided they demonstrate an intention to be bound. The Sale of Goods Act (Ontario) also contains similar statutory requirements for contracts over a certain monetary threshold. In light of these statutes, Ontario courts could reasonably find that an emoji, in the right context, constitutes acceptance of a contract. The determining factors would be the prior dealings between the parties, the nature of their relationship, and industry practices.

The Supreme Court of Canada’s Framework: Aga

The leading case on contract formation, Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga (Aga), reiterates that courts apply an objective standard to determine whether a contract exists. In Aga, the Supreme Court held that an agreement must indicate an intention to create legal relations. The Court emphasized:

1. Objective Theory of Contracts – Contract formation is assessed based on how an objective observer would interpret the parties’ actions and communications.
2. Intention to Create Legal Relations – Membership in an organization does not automatically create enforceable contractual obligations unless a mutual intention to be legally bound exists.
3. Clear Terms and Consideration – Courts require certainty in the essential terms of a contract to uphold its enforceability.

The Saskatchewan Court of Appeal relied on this reasoning when assessing whether the thumbs-up emoji constituted acceptance. The Court examined the broader course of dealings between the parties, as Aga instructs, and found that a reasonable observer would conclude that ALC intended to enter into the contract. The judge also noted that the exchange met the statutory requirement for a written and signed contract, further reinforcing the validity of the agreement.

Practical Takeaways for Contract Drafting

For businesses and legal practitioners, this case highlights the importance of clarity in electronic communications:

• Use Explicit Language – When confirming contractual terms via text or email, be clear about whether a message constitutes acceptance.
• Industry Norms Matter – Past dealings and industry standards can influence how courts interpret digital communications.
• Be Cautious with Emojis – While convenient, emojis introduce ambiguity. If informal responses are necessary, they should be followed by explicit written confirmation.
• Consider E-Signature Policies – Businesses should implement policies on how contracts are confirmed electronically to avoid disputes.

Conclusion

The Saskatchewan Court of Appeal’s decision signals that Canadian contract law is evolving to accommodate digital communication. While emojis may not always constitute contract acceptance, the specific context in Achter Land & Cattle supported enforceability. In Ontario, the principles from Aga and provincial electronic commerce laws suggest that courts could reach a similar outcome. Businesses and legal professionals must now navigate a landscape where even a simple emoji could bind parties to contractual obligations.

Disclaimer

The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading this article does not create a lawyer-client relationship between you and Bozai Law. Every legal situation is unique, and the application of law varies depending on specific circumstances.

If you require legal advice tailored to your situation, you should consult a qualified lawyer before taking any action. Bozai Law expressly disclaims all liability for any reliance placed on the information contained herein.

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